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What Do Business Rate Increases Mean For Your SME?

What Do Business Rate Increases Mean For Your SME?

by constructaquote - 28 February 2017


Regardless of the size and nature of your business, major changes are on the way. We recommend that you make an effort to know what these are, and how they may, or may not, affect your business in the near future.

On the 1st of April 2017 the business rates revaluation goes live, bringing a number of significant changes with it.

The 2017 rating revaluation will be a full revaluation of all rateable values. It will be based on all rental values as at 1st of April 2015, and will be the first revaluation since the 1st of April 2010. The idea of the revaluation is to realign rateable values in line with rental decline or growth since 2008. So whether you are the property owner or have been renting a business premises for sometime, find out what the implications are for your property and see how the rates in your area will change.

It’s likely there will be winners and losers for the 2017 revaluation, for example, central London office occupiers will have seen an increase in their rents, which will likely feed-through to an increase in their rates or value tax liability. This is good news, as the rates revaluation will mean lower prices going forward for some but unfortunately, have the opposite impact on others.

Some properties are eligible for discounts from the local council on their business rates.

Depending on the size and nature of the business, as well as the location of the property involved, you could find yourself paying half as much as initially anticipated. This would be done through the government’s ‘business rates relief’ programme. Note that rates relief is handled differently in Scotland, Wales and Northern Ireland, and that some types of relief have to be applied for, such as;

  • Small business rate relief
  • Rural rate relief
  • Charitable rate relief
  • Enterprise zone relief

Exempted buildings and empty buildings relief is automatically applied by your local council.

You should also be aware that some local councils give extra discounts. For example, you may be able to get hardship relief or transitional rate relief if your business meets certain criteria.

If your property has a rateable value below £18,000 (£25,500 in Greater London) you’re still considered a small business.

Even though you may not qualify for the small business rate relief, your business rates will still be calculated using the small business multiplier instead of the standard one. This is the case even if your business uses more than one property.

Rate liabilities could go up or down following the evaluation, depending on the property.

For example, the fact that the rateable value goes down, would not necessarily mean that the liability will go down.

The government review of business rates is highly likely to bring with it a completely new appeal system. The valuation office agency is using procedures that seem to follow the government policy of digital first. This means that all the information, as well as some of the evaluations, will be put up on their website as time goes by.

Rates payers should familiarise themselves with the new facts and should also seek out professional advice as we move towards the beginning of April. Business rates is a hugely complex area of property taxation, you will find that it all gets very tricky, regardless of which business idea you have brought to life…

Proper professional advice should be sought.